Apple/Starbucks Partnership

On September 5, 2007, Apple and Starbucks announced that they entered into an exclusive partnership to provide end users the opportunity to download music through iTunes. In order to access the service, a customer goes to a participating Starbucks location with their iPod® touch, iPhone™ or PC or Mac® running iTunes. The device automatically recognizes the iTunes Wi-Fi Music Store using a high-speed Wi-Fi wireless network. There is no connection fee or hotspot login required. An icon pops up on their device through which the customer is connected to the iTunes Wi-Fi Music Store. Customers can browse, search for and freely preview as many songs as they want. There is also a new “Now Playing” service that displays the name of the song playing in the Starbucks store at that moment.

The end user can easily buy and download any songs or albums they want to purchase directly to their device. Apple benefits from this partnership by expanding their customer base by making it easier to purchase music or videos. When the partnership was first announced, Steve Jobs, Apple’s CEO at the time said that “Getting free access to the iTunes Wi-Fi Music Store and the ‘Now Playing’ service at Starbucks is a great way for customers to discover new music. Imagine walking into a participating Starbucks, hearing a great song, and being able to instantly download it onto your iPod or iPhone. We think this is very cool.” (Apple Press Info, 2007, September 5) Starbucks benefits by providing their customers with a new way to entice customers into their stores. Howard Schultz, chairman of Starbucks Coffee Company stated that “With this partnership, we’re bringing Apple’s leadership in digital music together with not only our retail footprint, but the unique Starbucks experience, to offer customers a world-class digital music experience.

Introducing this new service is a natural extension of our music strategy which only enhances the retail coffee experience for customers by helping them discover and acquire new music instantly.” (Apple Press Info, 2007, September 5) The responses of Starbucks’ customers were mixed. Some like the idea, while others are opposed to it. According to one “The idea is really cool.” (Del Rio, n.d.) Another said “If the service is easy and takes two seconds, sure I’ll use it.” (Del Rio, n.d.) Then there are those at the opposite end of the spectrum, one customer claimed “I’m completely opposed to this. If Starbucks would offer free wi-fi, that would be a change; but it doesn’t need to become a customer’s personal office.” (Del Rio, n.d.) “Analysts for Starbucks and Apple said the collaboration represents the meeting of two spectacularly strong brands but will mean little for short-term sales.” (Allison, 2007, September 6) John Owens, a Starbucks analyst for the investment research firm Morningstar said, “At the end of the day, Starbucks is still about selling coffee in their stores.

I doubt this would significantly change Starbucks’ traffic patterns.” (Allison, 2007, September 6) “The Starbucks deal will bring ‘ancillary revenues’ for Apple, said Jupiter Research analyst Michael Gartenberg.” (Allison, 2007, September 6) The companies first partnered in the fall of 2007, when Starbucks launched its own area on the iTunes site featuring music chosen by the coffee company. There should not be any technological issues encountered in the implementation of the partnership. A year before the announcement, Starbucks had ended a wireless music program test of music downloading kiosks in stores where a customer could burn songs onto a personalized CD. As a result, everything was already in place for the partnership to proceed quickly and efficiently. “The iTunes Wi-Fi Music Store at Starbucks runs on the T-Mobile HotSpot Wi-Fi network which is available at participating Starbucks locations across the US.” (Apple Press Info, 2007, September 5) When Starbucks polled their customers, they were told that customers preferred wireless access.

Ken Lombard, president of Starbucks Entertainment, said customers “really wanted the ability to download music to a device. Now we’re there, and we’re very excited about it.” (Allison, 2007, September 6) “Lombard said tracks are chosen by a ‘content team’ at Starbucks, but he makes the final decisions. All Starbucks’ stores play the same music.” (Allison, 2007, September 6) The first promotion offered when the partnership was first announced was song of the day. This allowed the end user to download a particular song for free. This introduced customers to the experience of downloading music or videos while sipping away at their favorite coffee or tea beverage. Where will Apple and Starbucks go from here? An iPhone app of the week promotion began in 2011. There are many other opportunities they can harness to increase sales for Starbucks and Apple. Even though the brands are already strong, these promotions expose the customer to other purchasing options. If a customer wants to download the app of the day or the song of the day, they may be more likely to purchase additional music, videos, or applications.

References
Apple Press Info, (2007, September 5), Apple and Starbucks Announce Music Partnership, retrieved from http://www.apple.com/pr/library/2007/09/05Apple-and-Starbucks-Announce-Music-Partnership.html Del Rio, Michelle, (n.d.), Your Latte with a Song, retrieved from Allison, Melissa, (2007,September 6), Sip Starbucks, access iTunes, retrieved from